Caleres has continued to receive rave reviews from Wall Street — even after a softer-than-expected performance in its last quarter, Q2.
Following its Investor Day on Friday, analysts say their confidence in the company — whose portfolio includes Famous Footwear, Sam Edelman, Naturalizer, Dr. Scholl’s Shoes and LifeStride — and its management remains intact.
“Ken Hannah, Caleres’s CFO of eight months, in conjunction with CEO Diane Sullivan, has the company positioned well for long-term growth,” wrote Sterne Agee CRT analyst Sam Poser. “We finally believe that Caleres is providing the appropriate transparency and has the team in place to at least meet its long-term targets.”
During the investor meeting, Sullivan announced the firm’s new, upward-adjusted financial targets: Earnings per share are now expected in the range of $$1.95 to $2, from the previous guidance of $1.84 to $1.94; and gross margin is forecast to improve by 20 basis points instead of 15 basis points.
Here are five things you should know about Caleres’ plans for the long term and near term.
What Weather Woes?
Although unseasonably warm weather over the past few months has been a key factor dragging down shoe companies that rely on boot sales during the fall and winter months, Sullivan said Caleres has a good grip on weather woes.
“We have factored in whatever issues we see in our business, [and] frankly, we have a lot of businesses right now that are selling boots pretty well — short boots, tall boots, you name it,” Sullivan said.
Focusing on Key Brands
Caleres, of course, has a large portfolio, and “not all things are created equal,” Sullivan said. For that reason, the CEO explained, segments of the portfolio receive ramped up attention at different junctures.
“We’ve been focusing particularly on Famous Footwear, Sam Edelman and some of the contemporary fashion brands,” Sullivan said. “That’s where we think we can get the growth. We’re going to continue to make sure we maintain relevance in all the other brands, but we’re going to continue to focus on the growth of our key brand assets.”
In addition to Sam Edelman, Caleres’ contemporary fashion brands include Franco Sarto, Via Spiga, Vince and DVF.
Becoming More Consumer-Centric
“We’re going to be tracking consumer response to the top 10 shoes in each one of our brands across the company. And then we’re going to connect the performance of those shoes and those brands and Net Promoter Scores into the compensation, eventually, for the employees in our company,” Sullivan said. “Because we think if we can really tie back this quality — this promise of fit — [with] consumer input, [we can] drive those big items and make sure we’re engaging customers along the way.”
Other components of the company’s more consumer-centric outlook include omnichannel investments and accelerated investments in the firm’s “talent and teams.”
CFO Hannah said Caleres will continue to be “opportunistic” in purchasing brands.
“It’s important that we identify distinctive product [and] right, differentiated product and those things that fit within our portfolio and allow us to continue to grow and deliver those double-digit earnings,” Hannah said. “We’ll continue our dividend, and we’ll continue to buy back shares to offset the dilution that we incur as part of our compensation programs.”
The family-footwear retailer has been an integral part of Caleres’ success to date, and the company plans to continue to grow the division — though the focus will be more on targeting high-value customers.
“Our intent is to add 15 to 25 net new stores annually over the next five years, and our expectation is that half of those store openings will be in high-value-consumer trade areas,” said Richard Ausick, division president for Famous Footwear.